Does taking on my father's property make sense as a first time investor?

Question

Hello to anyone reading this ! This is my first post and Need some advice.   But first the backstory….

My father immigrated to this country over 30 years ago and has been able to acquire 4 properties in that span. 1 family home in long island, two 2 family homes in Queens and 1 vacation home in his country. Its time where i want to start my journey into real estate, now my father is more than willing to pass me the torch because he is also working a full time job. Trying to balance everything is just taking its toll.

****** I would like to take on of the two family properties he has in queens. Im already living in the basement. I know this property inside and out. I myself have done much of the repairs and have helped him with these properties for over 20 years.

I have 80k that i can invest into a property

The House is valued at about 900k he refinanced multiple times and he owes about 600k

Mortgage is fixed at 3.4% for 30 more years

Per month its at 3500

Right now 2nd floor is a two bedroom

1st floor is also a 2 bedroom. I have enough money and construction knowledge that i can convert both of these apartments in 3 bedrooms!

The property will have to stay under his name because of the interest rate, so How can i make him happy, make an investment and have some cash flow for myself ? Might be asking for too much on my end lol but my dad is more than willing to make this deal happen. Thank you to anyone who has any input !

Basit Siddiqi · Answer

Manage the property for him in exchange for a 10% management fee.Accumulate the cash to use as a downpayment for your own investment property.

Fausto P. · Answer

Thank you ! Very good information right here, i will definitely dm you in the future. Still doing my reading, listening and watching videos everyday to weigh out all my options

Fausto P. · Answer

This is definitely what im looking into doing, thank you !

Fausto P. · Answer

Thank you for the information definitely alot to consider!

Ashish Acharya · Answer

Taking on your father’s two-family property can be a great start, especially since you know it well and have $80k for renovations. Keep the 3.4% mortgage in his name to retain the low rate, and set up a lease agreement where you handle management, pay the mortgage, and share profits. Use your funds to convert the 2-bedroom units into 3-bedrooms to boost rental income. Establish a clear legal agreement with your father on responsibilities and income, and plan for future ownership transfer. Don't buy or transfer ownership before he passes to preserve the step-up basis eventually when you inherit. *This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Henry Clark · Answer

Run the numbers on each property.  Talk with a local realtor and tax accountant.  There are 50 more questions and answers you need to consider.

Example the house you’re talking about might not be worth anything to you as an investment.  Say it’s his home.  Value $900,000; $600,000 debt, $200,000 basis; 7% sales commission, only him- mother is deceased- $250,000 cap gain tax free, $70,000 sales concessions or repairs, capital gain tax on $550,000 less costs,  etc etc.

2 out of 5 year rule, can he live in other buildings?

Is he in good health?

If not in good health or old, how close to retirement home at $10,000 per month?  If he has no assets at time of going in, will they come back and take assets from you?

What are your father’s financial objectives?

What financial impact is the sibling?

Can you do a lease with sales option?  Without NNN so he transfers more wealth to you?

1031 into a property you would invest in?

Life insurance?  Is he insurance?

Etc etc.

Fausto P. · Answer

Im not thinking about purchasing right away, especially with the fact that the interest rate is so good. Still looking and doing research everyday

Mohammed Rahman · Answer

@Fausto P.

Hey Fausto, welcome to the forum! First off, huge props to your dad for building that real estate portfolio over the years 👏🏽

Given the numbers you shared (3.4% fixed mortgage is chef’s kiss), it sounds like a solid property with a lot of upside, especially since you already know the ins and outs and can add value by converting to 3-bed units.

As for keeping it under your dad's name—that’s understandable given the great interest rate. You could work out a "family trust" or another legal structure where you manage the property, get the cash flow, but maintain the rate. A formal agreement would also be smart to avoid any confusion later on.

Sounds like you’re in a good spot with the $80k to invest. Just run the numbers, and see what your cash flow will look like after the conversion and other expenses.

FYI - I'm a broker and investor in NYC, shoot me a DM if you want to chat further.

Nathan Gesner · Answer

There are ways for him to sell the property to you even with a mortgage, but there's a lot of complexity involved and I don't recommend it. I think you should focus on saving up and buying your own investments. Maybe you can consider buying his further down the road.

Does taking on my father's property make sense as a first time investor?

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